Jobs crisis intensifying under Duterte – IBON

Research group IBON said that despite recently hyped growth of 6.8 percent in first quarter 2018 the country’s jobs situation continues to worsen under the Rodrigo Duterte administration.

The Philippine Statistics Authority (PSA) reported that the employment rate grew slightly to 94.5 percent in April 2018, while the unemployment rate was lower at 5.5 percent.

The jobs situation seemed to improve as the number of employed Filipinos rose by 625,000 and the number of unemployed declined by 83,000.

The government largely attributed this to increased infrastructure spending.

According to IBON estimates correcting for government underestimation, however, the number of unemployed actually grew by 82,000 to 4.1 million in April 2018 from 4 million in April 2017.

Official unemployment figures do not reflect discouraged workers or those who have dropped out of the labor force after failing to find work after six months.

The agriculture sector, which is the second largest source of employment among the country’s sectors, had the most job losses, said the group.

Official data shows that the number of employed in agriculture fell by 723,000 to 9.8 million in April 2018 from 10.5 million in April 2017.

The sector has been plagued with job losses for the past four consecutive rounds of the labor force survey.

IBON also noted that the agriculture, hunting and forestry subsector lost 558,000 jobs, while fisheries lost 134,000.

The fisheries subsector had notable job losses for all labor force survey rounds under the Duterte government.

Poor quality work or jobs that are insecure, lack benefits and have low wages persists, said the group.

The number of underemployed or those looking for additional work increased by 466,000 from around 6.5 million in April 2017 to 6.9 million in April 2018.

IBON noted that among underemployed persons, those who worked 40 hours and over in a week grew by 758,000 from 2.4 million last year to 3.2 million this year.

The growing underemployment despite the increase in full-time work may indicate that much of reported full-time work still does not give enough income for the employed to meet their basic needs.

The number of part-time workers who worked less than 40 hours in a week decreased but still comprised 52.5 percent of total underemployed in April 2018.

The group also noted that nearly half or 47.1% of underemployed for this round were in the services sector, 32.4 percent in agriculture, and 20.5 percent in the industry sector.

Both services and industry sectors registered increases in underemployed persons from April last year.

IBON said that government has been content with minimal job generation in the non-productive sectors such as the kind offered during job fairs.

According to the group, government should instead ensure sustainable and decent jobs and livelihoods for Filipinos.

This can be done by embarking on a solid economic program that genuinely boosts the agriculture and fisheries sectors and develops the country’s vastly rural economy to build strong and vibrant domestic industries. #

Stop over-relying on foreign investments, government told

The Rodrigo Duterte government should not depend on foreign investments for economic progress and job generation soon after the enactment of the Ease of Doing Business and Efficient Government Service Delivery Act, research group IBON said.

The Ease of Doing Business Act or Republic Act (RA) 11032, signed into law last May 28, aims to simplify the application process for the establishment of businesses in the country.

Proponents say that RA 11032 aims to attract more foreign investments.

IBON said however that even after several decades of rising foreign investments, domestic industries and agriculture remain lagging while the Filipino people continue to be mired in a poor jobs situation.

Foreign direct investments (FDI) have grown by 391 percent from US$664 million in 2013 to US$3.3 billion in 2017.

But most of these investments have gone to foreign export enclave manufacturing, business process outsourcing, commercial and residential real estate, and transport infrastructure.

These areas are profitable for foreign and local big business, but not necessarily beneficial to the country’s economic development, said the group.

IBON explained that investments have remained scarce in domestic industries and agriculture sectors that are much-needed for sustainable and genuine growth and job generation.

For instance, agriculture only received 0.6 percent (US$19.6 million) of total FDI in 2017.

Meanwhile, the gross domestic product (GDP) share of agriculture declined from 10.5 percent in 2013 to 8.5 percent in 2017.

Manufacturing remains stagnant with minimal change from its 22.8 percent GDP share in 2013 to 23.6 percent in 2017.

Rising FDI has not translated into improved job generation.

IBON noted that the number of employed Filipinos fell by 663,000 from 40.3 million in 2017 from the previous year, which is the biggest contraction in employment in 20 years.

The labor force participation rate (LFPR) also dropped to 63.7 percent, the lowest in 20 years when it was 63.1 percent in 1985 during the severe economic crisis.

More recent official labor data for the first quarter of 2018 shows that there are over one million underemployed despite higher employment and lower unemployment.

Before RA 11032 was signed, the World Competitiveness Report showed that the Philippines’ attractiveness to corporations wanting to do business here was diminishing.

The country’s ranking plunged by nine slots, reportedly the biggest drop in Asia, due to employment concerns and poor social infrastructure.

IBON however said that instead of focusing on attracting foreign investments, the Philippine government should first ensure its control over key local industries, utilities and services, as well as place national interest and public welfare above local and foreign big business interests.

For the country to truly benefit from foreign investments, these should be planned in accordance with genuine domestic development, with close government monitoring and regulation, said the group. #

 

Php750 minimum wage possible, non-inflationary and good for the economy–​IBON​

Contrary to government and big employers’ claims, research group IBON said that raising minimum wages nationwide to Php750 is doable, need not spike prices further, and will benefit millions of Filipino workers and the economy.

The group cited the following reasons:

  1. Raising minimum wages nationwide to Php750 is doable if owners of establishments allow a small portion of their profits to go to their workers instead.

    Firms and the economy as a whole have more than enough profits to support this.

    Data from the 2015 Annual Survey of Philippine Business and Industry (ASPBI) of the Philippine Statistics Authority (PSA) shows that the 34,740 establishments employing 20 or more have Php1.7 trillion in total profits and 4.5 million employees.

    Raising the average daily basic pay of wage and salary workers from the nationwide average of Php378.71 to Php750 transfers just Php473.2 billion to workers’ pockets, which is only a 28.3 percent decrease in profits.

    Workers will meanwhile get to take home an additional Php8,076 per month on average.

    This still falls short of the family living wage and does not necessarily bring everyone up to a decent standard of living but such an increase will provide immediate relief to millions of Filipino workers and their families.

  2. Raising minimum wages nationwide to Php750 will not necessarily hike inflation. Prices need not go up and workers need not be laid off if employers accept the slight cut in profits.

  3. As it is, wages are not even keeping up with the rising productivity of workers so their ever-growing contribution to the economy increases employer profits more than improves workers’ welfare. For instance, according to the Labor Productivity Statistics of the PSA, the contribution of each worker to total gross domestic product (GDP) increased from Php196,179 in 2015 to Php198,215 in 2016 (up by 2.2 percent). This means that the average daily contribution of each worker to the economy amounts to some Php759.44 per day, which is more than double the average daily basic pay and more than the proposed national minimum wage.

  4. The economy will also benefit by increasing workers’ purchasing power and aggregate demand which stimulates higher production and increases economic activity. Raising minimum wages nationwide also reduces inequality by transferring wealth overly concentrated in a few to millions of workers and their families.

According to IBON, the country’s largest corporations and the wealthiest families owning these can easily absorb the substantial wage hike.

Smaller producers in micro, small and medium enterprises (MSMEs) will also be able to afford the wage hike with government support such as immediately providing cheap and easy credit, giving marketing support, nurturing locally-integrated supply chains, and improving their scientific and technological capabilities.

MSMEs will also benefit from increased worker demand for their goods and services in the domestic market, said the group. #

Substantial wage hike urgent, gov’t told

Research group IBON said that the government’s recently announced plan to respond to labor’s clamor for an increase in the minimum wage is welcome but underscored that this move is urgent amid rising prices.

The group said that the hike should be meaningful enough to keep up with accelerating inflation and worsening poverty.

Amid the three-year-high first quarter inflation, widely perceived to be caused by the government’s Tax Reform for Acceleration and Inclusion (TRAIN) among other factors, and labor’s demand for a wage hike, the Department of Labor and Employment (DOLE) said that a wage increase is coming up within the month.

According to IBON, it is urgent for government to ensure the legislation of a minimum wage hike that is sufficient for the working people to cope with the rising cost of goods and services.

Recent price spikes have been brought about by government’s own market-oriented policies such as the oil deregulation and tax reform laws that press prices up while wages remain low.

The group however stressed that the wage increase should be substantial, as the recent inflation rate will only continue to erode a paltry increase.

IBON explained that despite the last increase of Php21 in October 2017, which raised the National Capital Region (NCR) minimum wage to Php512 from Php491 per day, the real value has eroded by Php16.25 from Php464.19 in October 2017 to Php447.94 as of April 2018.

IBON also noted that the TRAIN has inflicted a heavy blow on the workers’ purchasing power as the real value of the NCR minimum wage lost a significant Php18.79 since the Duterte administration took office in July 2016.

According to IBON, initially increasing the minimum wage nationwide to at least Php750 as recently proposed by progressive lawmakers is the more practical measure.

This will allow wage earners to cope with inflation and increase their purchasing capacity.

It will also help bridge the gap between the nominal minimum wage and the family living wage (FLW) of Php1,173.14 in the NCR, for instance, as of April 2018 computed by IBON.

While the amount still falls short of the FLW, a Php750 minimum wage can be an initial important step towards increased economic activity and more vibrant economic growth that shall ensure a more stable price situation, said the group. #

One-fourth of increase: TRAIN aggravates oil price hikes–IBON

Government is wrong in downplaying the contribution of the Tax Reform for Acceleration and Inclusion (TRAIN) law on recent big-time oil price hikes, research group IBON said.

The price of fuel products combined with the TRAIN increased since year-end 2017 to Php10.20 per liter for diesel, Php11.41 for kerosene, and Php15.14 for gasoline as of last week.

These prices now include excise taxes and value-added tax (VAT), respectively, said IBON.

The price of diesel has increased to Php41.70/liter from Php31.50 at the start of the year, for instance, while the price of kerosene has increased to Php50.40/liter from Php38.99/liter as of year-end 2017.

The price of gasoline is now Php56.47/liter from Php41.33 as of year-end 2017.

The adjustment in the price of oil products has been attributed to the increase in the Mean of Platts Singapore (MOPS) prices and changes in the PH Peso–US Dollar exchange rate.

MOPS for gasoline prices has had a net increase of US$7.91/barrel and a net increase of US$5.92/barrel for diesel during the same period.

The exchange rate of the Philippine Peso to US Dollar did not help lessen oil prices as the peso depreciated against the US dollar by Php2.42 also in the same period.

One of the formulas by the Department of Energy (DOE) assumes a Php1.00/liter change in domestic oil price for every US$3.00/barrel change in MOPS.

IBON however observed that applying this formula does not reflect the steep hike in oil prices.

Moreover, according to IBON’s executive director Sonny Africa, TRAIN’s new and higher taxes aggravate and intensify the impact of these oil price hikes.

The TRAIN law adds new excise taxes on diesel and kerosene and raises excise taxes on gasoline.

TRAIN imposes a new Php2.50 liter excise tax on diesel and Php3.00 per liter on kerosene, while increasing that on gasoline by Php1.65-2.65 to Php7.00.

The final taxes imposed are even higher because the 12% VAT is also applied to them.

Thus, of the net increase in the prices of diesel, kerosene, and gasoline, TRAIN has added Php2.80, Php3.36, and Php1.85/2.97 to the price of every liter, respectively.

This means that TRAIN’s taxes accounted for one-fourth of the increase in the prices of diesel and gasoline.

TRAIN keeps increasing the excise tax on oil products and by 2020 they will have permanently added Php6.72/liter to the price of diesel, Php5.60/liter to the price of kerosene, and as much as Php6.33/liter to the price of gasoline.

“Real wages are stagnant at very low levels and TRAIN’s new taxes and inflationary impact are an unnecessary additional burden on the majority of Filipinos who are low-income earners,” said Africa. # (Image from Philippine Gas Price Watch through IBON)

Still no better jobs for Filipinos–IBON

First quarter economic growth this year did not translate to better jobs for Filipinos, research group IBON said.

This means that despite government claims that the groundwork for reforms has been laid, growth has remained essentially exclusionary, generating jobs that are insecure and low-paying, said the group.

Socio-Economic Planning Secretary Ernesto Pernia recently announced the 6.8 percent Philippine economic growth for the first quarter of 2018 to be among the fastest in Asia, second only to Vietnam’s 7.4 percent and at par with China’s.

According to Pernia, these indicate that infrastructure development is accelerating and “Build, Build, Build” is gaining ground.

NEDA even said that OFWs could thus consequently come home to more jobs.

IBON however underscored how at the same time, underemployment, part-time work and informal work swelled by over a million jobs each.

The group said that this implies how, amid supposedly growing capacity to produce goods and services, Filipinos were subjected to more insecure and low-paying jobs.

From January 2017 to January 2018, employment grew by 2.4 million especially in agriculture, services, manufacturing, and construction.

But the number of underemployed or persons looking for additional work grew from 6.4 to 7.5 million.

The number of part-time workers or those who worked below 40 hours a week increased by 1.2 million from 13.5 to 14.7 million.

Those in informal work, meanwhile, or in jobs that are uncertain or irregular with poor pay and benefits, increased by 1.4 million from 14.6 to 16 million.

According to IBON, poor quality work is growing because employers seek to peg wages at a low, minimize benefits and keep labor flexible to be able to increase their profits.

The government takes the side of employers and supports them with its policies of wage rationalization and labor flexibilization, which it justifies as needed to attract investments and drive growth, said the group.

It argued, however, that government’s vision for progress should instead include building a strong domestic economy that can generate regular, full-time and decent-paying jobs.

These can boost the Filipino working people’s purchasing power and yield higher returns for the Philippine economy, IBON said. # (IBON.org)

TRAIN-induced price increases are permanent—IBON

The inflation spike marks the start of increases​ driven by the Tax Reform for Acceleration and Inclusion (TRAIN)​ in the prices of basic goods and services for the next three years, research group IBON said.

Further inflationary surges are likely to happen in 2019 and 2020 when the next two rounds of additional taxes on oil products take effect.

The Duterte administration’s banner TRAIN is among the biggest factors driving the inflation rate to its highest in over six years, said the group.

IBON noted that the headline inflation rate of 4.5 percent year-on-year in April is the highest since late 2011, bringing the year-to-date average inflation rate to 4.1 percent.

This already breaches government’s inflation target for 2018.

As it is, food, vegetable and fuel prices are already higher from a year ago, IBON observed.

The price of regular milled rice has increased from Php35 to Php40 per kilo, of galunggong from P140 to Php160, of pork liempo from Php225 to Php240, sitao from Php60 to Php100 per bundle, and red onions from Php50 to Php80.

Just since January, the price in Metro Manila of diesel has gone up by over Php7 per liter to Php44.35 and of gasoline by some Php6.80 to Php55.37.

LPG is also already much more expensive at some Php650-750 for an 11-kg cylinder.

“The higher prices of basic commodities hit the country’s poorest 17.2 million families who do not get any personal income tax (PIT) benefits the worst. This burden belies the Department of Finance’s (DOF) fake news claim that ’99 percent of taxpayers’ will benefit from TRAIN,” IBON executive director Sonny Africa said.

Africa also said that government economic managers are being dishonest and insensitive when they downplay the impact on prices by saying that the inflation spike is only temporary.

“The price increases from TRAIN are very permanent and even if inflation rates moderate this does not mean that prices will be lower,” Africa said.

“It is grossly deceitful for economic managers to give the impression or claim otherwise. Prices will continue to rise for the poor from TRAIN’s new and higher taxes unless the government says that the inflation rate will turn negative, which is unlikely,” he added.

According to Africa, while there are many reasons for inflation the government only seeks to divert from its direct accountability for TRAIN-induced higher prices by exaggerating the effects of global oil price and the peso depreciation.

Dubai crude has been at US$62-66 per barrel and the peso at up to Php52.10 per US$1 since the start of the year.

However, even when the price of Dubai crude reached US$105 per barrel in 2013 inflation only averaged 2.6 percent.

Similarly, when the peso was at over Php54 per US$1 from late 2002 to mid-2004 inflation only averaged 2.5 percent , Africa explained.

Africa said that among all the major factors driving high prices, the government has the most control over the taxes it charges.

“If government wants to it can immediately lower inflation and prices for the people by suspending implementation and then repealing the grossly regressive TRAIN law,” he said.

Revenues can and should instead be raised with progressive tax reforms that increase the burden on the country’s super-rich and that relieve the poor majority while their incomes are still so low, Africa concluded.​# (IBON.org)

 

Working Filipino’s real wage, purchasing power weakening under Duterte

Research group IBON said that accelerating inflation is rapidly eroding the real wage and purchasing power of minimum wage earners in the National Capital Region (NCR).

Real wages show the actual value of wages after these are adjusted for inflation. After almost two years in power, the Duterte administration has only raised the minimum wage in the NCR once–in October last year–which increased this from Php491 in July 2016 to Php512 as of March 2018.

The nominal Php21 increase has however not been enough to keep up with rising prices.

Inflation has been steadily accelerating since the start of the Duterte administration to reach a six-year-high of 3.7 percent in 2017.

It is looking to become even higher this year at 4.8 percent already in the first quarter of 2018.

Minimum wage earners have actually already lost Php16.80 per day with the real value of their wages, measured at 2012 prices, falling from Php466.70 in July 2016 to just Php449.90 in March 2018.

The year 2012 is used as the reference period because this is the base year of the Philippine Statistics Authority (PSA) in computing the consumer price index (CPI) and inflation.

As it is, the NCR minimum wage of Php512 falls far short of the estimated Php973 family living wage (FLW) for a family of five, and even further short of the Php1,168 FLW for a family of six.

The eroding purchasing power of workers is resulting in even lower standards of living for minimum wage earners.

IBON said that the government should urgently address the grossly insufficient wages of workers, which is even being rapidly eroded by high inflation.

Immediate and concrete steps include implementing the Php750 national minimum wage demanded by workers’ groups and suspending implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Package One, which is driving prices up and amending this to become genuinely progressive; and enforcing price controls such as on staple food items. # (IBON.org)

Php750 national minimum wage a legitimate call

(IBON Facts & Figures excerpt)

The demand of progressive workers’ federations for the re-installation of a national minimum wage and pegged at Php750, along with the abolition of the regional wage boards, is an immediate, important and doable step towards making economic growth genuinely inclusive and addressing worsening inequality in the country.

Based on IBON estimates, raising the average daily basic pay from the nationwide average of some Php367.35 to the proposed Php750 national minimum wage transfers just Php448 billion to workers’ pockets – this is only 27.4 percent decrease in profits, which still leaves employers with a significant 72.6 percent (Php1.18 trillion) of their clean profits.

On the other hand, each worker will be able to take home, on average, an additional Php8,364.00 per month.

The amount of profits transferred to workers’ wages was computed based on data from the latest (2014) Annual Survey of Philippine Business and Industry (ASPBI) of the PSA. The census shows that 35,009 establishments with employment of over 20 or over had Php1.63 trillion in total profits and 4.13 million employees.

The country’s largest corporations and wealthiest families are the most able to absorb the wage hike. In fact, the total cost of proposed Php750 national minimum is only equivalent to 20 percent of the total net worth of the 10 richest Filipinos.

Meanwhile, the government can ensure special support for small producers of micro, small and medium enterprises (MSMEs) to help them cope with the proposed national minimum wage. This includes immediately providing cheap and easy credit, giving research, development and marketing support, nurturing locally integrated supply chains, and improving their scientific and technological capabilities. (Excerpt from Continuing Wage Depression, IBON Facts & Figures, April 2017.)

Amid price hikes: Minimum wage insufficient vs. rising family cost of living — IBON

The onslaught of price hikes since early this year has made the mandated minimum wage in the National Capital Region (NCR) even more inadequate for millions of Filipino workers to decently support their families, said research group IBON.

IBON computations show that the NCR nominal minimum wage still falls considerably short of the rising family living wage (FLW).

As of March 2018, Php1,168 is needed daily to support a family of six, while Php973 is needed for a family of five.

Worsening inflation has increased the FLW needed from the same period last year by Php57 for a family of six and by Php48 for a family of five–a 5.2 percent increase for both.

The minimum wage however has not kept up with the rising cost of living.

The NCR nominal minimum wage of Php512 is just 43.8 percent of the Php1,168 FLW in March this year.

This translates into a significant wage gap of Php656 or 56.2 percent, said the group.

For a family of five, the gap was nearly half (47.4 percent) of the FLW.

These wage gaps grew despite the regional wage board’s approval of a Php21 minimum wage increase from Php491 to Php512 last October 2017.

IBON said that the wage discrepancy is just as wide as the same period last year. In March 2017, the nominal minimum wage in the NCR of Php491 was 44.2 percent of the Php1,111 FLW for a family of six.

This was a wage gap of Php620 or 55.8 percent.

The group also noted that the average daily basic pay of wage and salary workers in NCR has declined under the Duterte administration. Latest official figures show that the NCR average daily basic pay fell from Php557.46 in July 2016 to Php542.16 in July 2017.

Workers’ minimum wages cannot cope with the higher prices that are driving up inflation and the cost of living, said the group.

The 5.2 percent inflation rate for the NCR in March 2018 is so far the highest in five years according to the Philippine Statistics Authority.

IBON said that there should be an immediate, substantial and across-the-board minimum wage increase against the high inflation.

The government should approve and mandate the Php750 national minimum wage that workers groups are calling for.

Implementation of TRAIN Package One which is among the drivers of inflation should also be suspended and the law reviewed towards being amended to become genuinely progressive.

It should also ensure job security, necessary benefits, better working conditions, as well as much-needed social services that will assist Filipino workers and their families in meeting their basic needs, said the group. #